Teen clothing outlet Forever 21 is coming under fire on social media after a leaked memo declared that many of its full-time employees would be moved to part-time positions before the end of August.
While many cited Forever 21's move as a reaction to the Affordable Care Act (aka Obamacare), the retailer insists its decision was based on "projected store sales" and not the controversial health care law that includes an employer mandate, reports The Washington Post.
Even if Forever 21 is trying to skirt Obamacare, is it possible for a small business to simply demote its full-time employees to part time?
Why the Part-Time Push?
Although the memo, which was leaked by TheFrisky.com, makes no mention of Obamacare, many have inferred a connection between the company's Christian identity and providing its employees benefits under the new health care law, reports the Post.
Now delayed until 2015, Obamacare's employer mandate will require many businesses to provide health insurance to employees who work at least 30 hours a week. Notably, the Forever 21 memo would shift many full-time employees to working no more than 29.5 hours per week.
The company claimed on its Facebook page that the move will impact "less than 1 percent of all U.S. store employees," reports the Atlanta Journal-Constitution. But this hasn't served to calm the Internet masses.
In addition to being blasted on Facebook and Twitter, online petitions like this one are cropping up calling for a change to the company's part-time shift under threat of boycott.
Should Your Company Make the Shift?
While there are no state or federal labor laws that prevent a private company from shifting full-time employees to part time, a business owner who previously offered health insurance to full-time workers is required to extend COBRA coverage to the now part-time employees.
Forever 21 acknowledged in its memo that the reduction in hours would be considered a qualified "life event" for insurance purposes, allowing employees' spouses and children to extend health coverage without interruption under COBRA or the other spouse's employee health plan.
The retailer will also, as required by most state laws, pay out its full-time employees for any remaining vacation time.
Any employer like Forever 21 may be entitled to reduce its full-time employees under law, but the loss in customer goodwill may make this a risky business gambit.
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- Forever 21 caught in Obamacare controversy (MSN Money)
- Should Businesses Drop Healthcare Under Obamacare? (FindLaw's Free Enterprise)
- Part Time, Temporary, and Seasonal Employees (FindLaw)
- At-Will Employee FAQ's (FindLaw)